When an employee is promoted to their first manager’s position, they are given the proverbial Keys to the Kingdom. They now have the authority to spend your money. From the hiring, to promotions, to salary reviews, equity adjustments and beyond they are now able to render decisions that directly impact your labor costs.
However, many of these managers turn out to be well-intentioned amateurs at the process of making reward decisions appropriate to the needs of the business. Fresh from being anointed they often lack the internal education necessary to make effective business vs. emotional decisions – and their actions commit you and your organization to costs that may not be in your best interests.
Actions taken by these managers not only increase direct costs but often irritate other staff members as the circumstances become known, creating both morale and internal equity problems. The net result can be a corresponding loss of engagement and ultimately separations by disenchanted employees.
Note: Most employees leave managers, not companies. Thus, a manager's actions do have consequences. Likely this is not what you envisioned when you made that promotional decision.
How Did You Get into This Mess?
First, no one really trains managers on how to properly attract and reward employees via base salaries and incentive pay.
A few anecdotal examples:
- Just because someone is a good “XYZ Operator” does not mean they will be an equally good “XYZ Manager.” The skill sets for success are markedly different.
- How many managers understand your company’s philosophy about pay? How many understand the workings (the what and the why) of the company’s pay practices and methodology? These are the folks responsible for spending 40% to 60% of your revenue (employee pay), and even the most well-intentioned is prone to make mistakes.
- Managers want to be liked; they do not wish to pick favorites, do not want to discriminate based on performance and do not want to have their decisions challenged. They would rather point a finger at Human Resources and assign the blame there for having to assess performance and distinguish one employee from the other. Left to their own devices most would give everyone as much as they could.
If you were a high performing employee, would you like to work for this Manager? On the other hand, if you were coasting at work, barely putting your time in, how would you feel? Which employee will eventually tire of being undervalued and quit? Which would leave the Manager staffed with Joe Averages.
Ineffective managers are afraid that an unhappy employee will decide to quit. Their prime concern is what the departure would mean to their deliverables, to their reputation as a manager. A departure is typically viewed as an inconvenience for them, not an avoidable loss for the company. A reflection of this viewpoint is when managers resist granting a transfer that is clearly in the employee’s career interests. The manager’s concern is how that transfer affects their department – and whether their own personal success would become more difficult to attain.
Ineffective Managers can also be a defensive lot, quick to challenge any attempts at reform. Why? Because of their fear that reform action will uncover their ineffectiveness, and that exposure is worth resisting. Typically, their in-house advantage is that the more ineffective the manager, the stronger their political connections. And as senior management oftentimes surround themselves with those most agreeable to their own way of thinking, it’s not surprising.
Corrective Action
Assuming the company’s willingness to make key decisions, and the presence of all-important support from senior management, companies can act to correct the problems that they’ve created.
- Select candidates for management positions based on capabilities to deal with actual management issues (people interaction, managing projects, business-oriented, professional demeanor, etc.).
- Educate Managers in the philosophy and methodology of the organization’s pay programs, ensuring that this information is shared with their staff.
- Construct job specifications that call for a Manager to manage, as a prime accountability, limiting or even eliminating the retention of individual contributor responsibilities.
- Measure and reward manager performance primarily based on how they have managed their employees, or on the performance of their unit.
- Encourage Managers to develop the potential of their employees, to the point that a staff member being promoted is a mark of success for the Manager.
- Ensure that procedural checks and balances are in place to ensure that pay decisions are reviewed at least one level higher.
- Hold Managers to an annual salary increase budget; let them help develop and monitor it during the year.
Consider the above as a checklist that can be used to test your organization’s vulnerability to wasted money, employee morale problems, turnover, and avoidable cost increases.
My advice to clients is to face these issues straight on, to implement policies and procedures that save money without penalizing high performers or mistreating their employee base. But the challenge will always remain, as there is an inherent reluctance on the part of many managers to make the tough decisions because we do want to be liked, we do like to give good news, and we do not like to play judge and jury with an employee’s career.
Chuck Csizmar CCP is founder and Principal of CMC Compensation Group, providing global compensation consulting services to a wide variety of industries and non-profit organizations. He is also associated with several HR Consulting firms as a contributing consultant. Chuck is a broad based subject matter expert with a specialty in international and expatriate compensation. He lives in Central Florida (near The Mouse) and enjoys growing fruit and managing (?) a clowder of cats.
Creative Commons image, "942217_1015285940," by Dan Mantyla
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